Threshold quantile autoregressive models

We study in this article threshold quantile autoregressive processes. In particular we propose estimation and inference of the parameters in nonlinear quantile processes when the threshold parameter defining nonlinearities is known for each quantile, and also when the parameter vector is estimated consistently. We derive the asymptotic properties of the nonlinear threshold quantile autoregressive estimator. In addition, we develop hypothesis tests for detecting threshold nonlinearities in the quantile process when the threshold parameter vector is not identified under the null hypothesis. In this case we propose to approximate the asymptotic distribution of the composite test using a p-value transformation. This test contributes to the literature on nonlinearity tests by extending Hansen’s (Econometrica 64, 1996, pp.413-430) methodology for the conditional mean process to the entire quantile process. We apply the proposed methodology to model the dynamics of US unemployment growth after the Second World War. The results show evidence of important heterogeneity associated with unemployment, and strong asymmetric persistence on unemployment growth

Economic integration across borders : the Polish interwar economy 1921-1937

In this paper we study the issue of economic integration across borders for the case of Poland's reunification after the First World War. Using a pooled regression approach and a threshold cointegration framework we find that the Polish interwar economy can be regarded as integrated with some restrictions. Moreover, a significant negative impact of the former partition borders on the level of integration that can be found for the early 1920s vanishes in the middle of the 1920s. This suggests that the integration policy after the reunification of Poland in 1919 was surprisingly successful. --Economic integration,Border effects,Law of one price,Poland,Threshold cointegration

Murder by Numbers: Socio-Economic Determinants of Homicide and Civil War

Deliberate killing is a common part of the defining features of both homicide and civil war. Often, the scale of killing is also similar: most countries have homicide rates that exceed the threshold of one thousand combat-related deaths during a year that is the standard criterion for civil war. What is clearly different is the organization of killing: the perpetrators of homicide are usually individuals or small groups, whereas rebellion – the direct cause of a civil war - requires a cohesive group of at least several hundred killers. Beyond this, the motivation for the two types of killing may differ systematically, although evidently both homicide and rebellion have many different motivations, including error and irrationality. In this paper we investigate whether the socio-economic determinants of homicide and civil war are similar, and then explore potential inter-relationships between them. We compare our existing model of the risk of civil war with a new model of the homicide rate. We find that there is a ‘family resemblance’ between the two types of killing, but surprising differences. Furthermore, we turn to the inter-relationships between homicide and the risk of civil war. Specifically, we ask whether a high rate of homicide makes a country more prone to civil war, and whether a civil war makes a country more prone to homicide. Our results indicate that higher homicide rate do not increase the risk of war but that civil wars generate a legacy of increased post-conflict homicide rates.

The Evolution of Hybrid Warfare: Implications for Strategy and the Military Profession

The concept of hybrid war has evolved from operational-level use of military means and methods in war toward strategic-level use of nonmilitary means in a gray zone below the threshold of war. This article considers this evolution and its implications for strategy and the military profession by contrasting past and current use of the hybrid war concept and raising critical questions for policy and military practitioners

The Threshold Requirement in Asymmetric Conflicts: A Game Theory Analysis

In recent years, ad bellum rules have been interpreted more leniently so as to permit forcible responses to terrorism. Yet the threshold level for an “armed attack” that legitimizes full-scale war in response has remained relatively high. This observation is especially puzzling insofar as customary international law reflects the practice of (strong) states, which, as we show, can benefit from credibly committing to lowering their tolerance towards terror attacks. Why is the threshold requirement relatively tolerant? What would be the critical mass of terror beyond which a full-scale war is legitimate? Under what circumstances are states expected to violate the ad bellum threshold requirement? This Article seeks compelling answers to these questions using game theory. We argue that a low ad bellum threshold requirement (an “intolerant strategy”) is a futile measure to fight terrorism, since normally it cannot underlie a renegotiation-proof equilibrium. Namely, were a strong state to seriously consider waging a full-scale war in response to repeated, low-level terror attacks sponsored by a weak state, both parties would be better off renegotiating their way back to the status quo ante. On the other hand, renegotiation may fail if transaction costs are high enough, which ultimately makes the intolerant strategy sustainable and the equilibrium level of terror lower. The overall conclusion is thus counterintuitive: an effective intolerant strategy in the War on Terror is beneficial for victim states, but implausible unless the barriers towards a nonviolent arrangement are sufficiently high

Pakistan's Nuclear Threshold: Not as Low as Perceived

At slightest pretext, Pakistan threatens to use nuclear weapons against anyone it feels insecure, and more so against India.[1] The introduction of tactical nuclear weapons (TNWs) into its inventory has been portrayed to have sufficiently lowered its nuclear threshold. Rawalpindi appears to believe that there is no space for conventional war, and it can use nuclear weapons on the battlefield if New Delhi crosses its ‘redlines’ without triggering a ‘massive’ nuclear retaliation. On the contrary, New Delhi appears to believe that a limited conventional war can be fought and won below Pakistan’s nuclear threshold

Prizes for Basic Research -- Human Capital, Economic Might and the Shadow of History

This paper studies the impact of global factors on patterns of basic research across countries and time. We rely on the records of major scientific awards, and on data dealing with global economic and historical trends. Specifically, we investigate the degree to which scale or threshold effects account for countries share of major prizes [Nobel, Fields, Kyoto and Wolf]. We construct a stylized model, predicting that lagged relative GDP of a country relative to the GDP of all countries engaging in basic research is an important explanatory variable of country's share of prizes. Scale effects imply that the association between the GDP share of a country and its prize share tends to be logistic -- above a threshold, there is a "take off" range, where the prize share increases at an accelerating rate with the relative GDP share of the country, until it reaches "maturity" stage. Our empirical analysis confirms the importance of lagged relative GDP in accounting for countries' prize shares, and the presence of "winner takes all" scale effect benefiting the leader. Using measures of casualties during the wars, we find that the only significant effect can be found for a lag of 3 decades – i.e., deaths in the war negatively impact the viability of basic research about 30 years after the fact. With more recent data, we document the growing importance of countries that used to be at the periphery of global research, possibly advancing towards the take off stage.Global economic trends, basic research, World War I and II, human capital, winner takes all